The US stock markets collapse once again, under the effect of shutdown and rate increase by Federal Reserve

Washington: The US Stock markets collapsed on Monday owing to the rise in the interest rate by the Federal Reserve, the shutdown started because of non-passage of the Federal Spending Bill and the shocking decisions of President Trump. All the three indices Dow Jones, S&P 500 and Nasdaq, reported record falls, and these are the highest falls on a Christmas eve in over a decade. The consistent fall in the stock markets has made the performance of the stock market in December as worse than the mega-recession in 1930.

Last Friday, there was a record decline reported in all the three stock indices. The technology companies were seen to be the worst hit. It was being hoped that the process will reverse during the Christmas season. But the trend of decline, which started at the beginning of the month continued on Monday.

Dow Jones suffered the most on Monday, crashing by a full 653.17 points. Dow Jones declined by 2.91% in a single day, and at the end of the day, it settled at a record low of 21,792. S&P 500 dropped by 65.52 points to close at 2,351. This is a decline of 2.71% in the index. Nasdaq Composite Index saw a drop of 2.21% closing at 6,192 after a fall of 140 points.

For the US stock markets, the month of December is usually known to be a month of good performance. But after the Monday crash, the US stock markets have recorded their worst and exasperating performance in the last nine decades. The US stock markets suffered losses of this magnitude only during the mega-recession in 1931. The record crash on this Christmas Eve has entered the record books as the highest crash on a Christmas Eve. This crash is said to have stalled the growth seen in the share indices over the last decade.

The decision of the Federal Reserve to revise the interest rate upwards proved to be the main factor for the disastrous performance of the US stock markets. The US Federal Reserve has increased the interest rate by 0.25% taking the interest rate to 2.50%. This is the fourth increase in the interest rate by the Federal Reserve in 2018.

As per the analysts, other than this, factors like the shutdown started due to non-passage of the Federal Spending Bill as the US Congress rejected the demand of US President Trump, US-China trade war, military withdrawal from Syria and resignation of Secretary of State, James Mattis has affected the market sentiment. The US Secretary of Treasury, Steven Mnuchin has set up a separate group against the background of the stock market crash and has asserted that the other factors in the economy are performing well.

Trump accuses Federal Reserve of the upheaval in the stock markets

US President Trump launched a scathing attack on the Federal Reserve ‘The only problem in the US economy is the Federal Reserve. They don’t care about the stock markets. The Federal Reserve does not care for the trade wars necessary for the United States, strong dollar or the shutdown started by the democrat party over the issue of border security. Federal Reserve has turned out to be an influential golfer unable to score a single point, who has lost its skill and he cannot score any points.’

Only last week, reports had been received that President Trump was unhappy with Jerome Powell, the chief of Federal Reserve and was making moves to remove him. Even before this, the US President had consistently targeted the Federal Reserve. Trump had accused the Federal Reserve of pulling the economy back, as and when there are signs of improvement in the US economy.